West Bank and Gaza: Report to the Ad Hoc Liaison Committee

The outlook for the Palestinian economy remains dire, with risks tilted to the downside. Amid a deteriorating security, political and social situation, the recovery is losing momentum and per capita income is projected to decline over the medium term. The fiscal crisis remains unresolved, amid limited prospects for much-needed deep expenditure reforms and resolution of the outstanding fiscal files with Israel. The banking sector remains stable and well-monitored, but early signs of asset quality deterioration are emerging.